(The following post has been contributed by Karan Tyagi, who is an associate with Gide Loyrette Nouel in Paris. After obtaining his law degree from GLC (Mumbai), Karan went on to do his LL.M. from Harvard Law School last year. He can be contacted at [email protected]) Yesterday’s Financial Express has a piece authored by me on Rajat Gupta’s insider trading trial in the...
Corporate Governance: Transactions with Controlling Shareholders
Two recent events around the world bear eerie resemblances with India’s own corporate governance scandal that came to light in Satyam Computers nearly three years ago. Readers may recall that the Satyam episode was triggered by the company’s proposed acquisition of two related entities, Maytas Properties and Maytas Infra, which was approved by the board of Satyam, but vehemently rejected by its...
Court of Appeal: Clarification of ‘Meridian’ attribution
The theory of attribution in common law turns significantly on the application of the two main cases: Tesco Supermarkets v. Nattrass [1972] AC 153 (which provides for a strict reading of who the ‘directing mind and will’ of a company is), and Meridian Global Funds v. Securities Commission [1995] 2 AC 500 (which, in certain instances, allows for a more flexible understanding). In the...
Lifting the Veil: Is ‘Fraud’ Necessary?
The sanctity of the corporate veil is among the most important pillars of certainty in commercial law today. English Courts, we have seen earlier, have given great respect to independent personality, refusing to lift the veil on grounds of economic ‘reality’ such as “single economic entity”, or subjective notions such as “public interest”. This tendency has been in existence since Adams v. Cape;...
Manchester United and the Dual Class Share Structure
The financial press is abuzz with Manchester United’s possible listing on Singapore’s stock exchange (SGX) with a dual class share structure. For example, the Financial Times notes: Manchester United football club’s $1bn initial public offering in Singapore will use a two-tier share structure that will minimise the influence of outside shareholders over the US-based Glazer family. The ability to...
Diaspora Bonds
The Economist has a piece that discusses the advantages of diaspora bonds to poor countries. It notes: The idea is simple. Poor-country governments can issue bonds and market them to emigrants in rich countries. There are several advantages to milking members of a diaspora. They are often patriotic: they like the idea that their savings will pay for bridges and clinics at home. They are patient...
Fiduciary Duties and the Nature of an LLP
While the position of law in relation to the inter-se relationship between partners of a firm is fairly well-settled, there is no great clarity on similar issues arising in the context of LLPs. It is clear that the “double agency” rule of partnerships does not apply to LLPs: but, if LLPs are seen as a hybrid form of a partnership and a company, does the law impose any fiduciary duties on members...
CSX/TCI: Appellate Court on Disclosures and Takeover Law
Sometime ago, we had the opportunity to discuss a decision of the U.S. District Court for the Southern District of New York pertaining to the use of cash-settled total-return equity swaps by acquirers and whether that would trigger disclosure requirements under appropriate U.S. regulations governing takeovers. Now an appellate court has pronounced its decision in which the majority of the judges...
Rating Agencies Back in the Spotlight
S&P has indeed made a bold move by downgrading United States’ sovereign rating. While there may by political opposition, quibbles with the arithmetic, and the like, there is a strong view that those amount to “shooting the messenger”. The downgrading by S&P assumes greater importance because it comes in the wake of determined efforts by governments to tighten their control over credit...
Enforceability of “Side Letters”
Background It is customary for parties to enter into “side letters” in corporate and commercial transactions. Side letters are documents which are ancillary to the principal transaction documentation. There are a number of reasons why parties could potentially enter into side letters, rather than include their subject matter in the principal documentation. Side letters are useful when parties...
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